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The makers of the brand name pharmaceuticals Lipitor and Effexor XR were dealt a significant loss in the Third Circuit Court of Appeals in a consolidated antitrust case appeal. Drug makers Pfizer and Ranbaxy, as well as their affiliates, plan to continue to fight this matter out.
The In re: Lipitor Antitrust Litigation appeal overturned a district court's dismissal of two separate complaints against each drug's respective maker. The thrust of both cases involved reverse payment settlement agreements which were alleged to be anticompetitive and attempts at creating a monopoly. Additionally, as to the claims against Lipitor, it was alleged that the drug maker engaged in fraudulent patent procurement and enforcement.
The plaintiffs in these matters alleged that the drug makers entered into reverse payment settlements in order to delay generic drugs from being introduced into the market. Essentially, instead of a traditional patent enforcement settlement, where an infringer would be squeezed into paying to avoid costly litigation and a judgment, the alleged infringer actually receives payments from the party claiming infringement in exchange for not producing the item at the center of a dispute.
The reason reverse payment settlements occur in cases like these, generally, is that a brand name drug maker stands to make enough money to offset the costs of the payments so long as a generic drug maker does not enter the market. However, this type of settlement, by its very nature, is anticompetitive, and therefore can raise some red flags.
The Third Circuit made clear, early on in their decision, that the U.S. Supreme Court has held that reverse payment settlements paid from patentees to infringers are subject to strict antitrust scrutiny. Additionally, it found that the settlement agreements did lead to the plaintiffs' claims meeting the plausibility pleading standard required for these sorts of antitrust claims, particularly given the large payments.
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